New Guidelines Make Health Insurance Appeals Easier for Public

Published: Mon 26 Jul 2010

Thomas Kristoffersen

On Thursday, Obama's administration took the first step toward guaranteeing that American consumers have the ability to appeal to an objective referee if a claim is denied by their health insurance company.

However, because Obama's health care overhaul and medical insurance are so complicated, the new federal protections will not apply immediately to the majority of consumers with private health insurance.

The safeguards outlined on Thursday describe a two-stage appeals process, according to administration officials.

Consumers must first appeal to the health insurer directly. If their claim is denied a second time, they can appeal to an impartial reviewer whose decision is final. Medical plans must cover the expense of outside appeals, and if their decision is overruled, the insurer must fully cover the claim in question.

Policyholders can also invoke the appeals process in the event of coverage cancellation. The rules also call for fast-tracked decisions in medically urgent situations.

While most health policies already have an appeals system in place and 44 states have laws providing for external reviews, the federal regulations are stricter with health insurers and more consumer friendly. For instance, if an insurer denies a claim, it must offer the policyholder a clear explanation.

Beginning in 2011, an estimated 40 million Americans in individual and employer plans will benefit from the new safeguards. By 2013, that number will increase to roughly 88 million. Approximately 160 million consumers are insured by workplace plans, and an additional 17 million purchase their coverage from health insurers directly.

Phyllis Borzi, the assistant labor secretary, explained to reporters that the appeals safeguards do not apply to medical plans that were in operation at the time the health care reform bill was signed into law and are regarded as "grandfathered."

Many such policies are operated by large employers who pay the costs of their health care directly and recruit a health insurance company to administer their coverage. Federal officials intend to review the rules of those plans separately.

"We have our own regulatory agenda that we are going to upgrade (those) rules," said Borzi.

States have until July of 2011 to adjust their insurance regulations to comply with the new federal protections.